T&T ENERGY MINISTER DISCUSSES INFRASTRUCTURE

C O N F I D E N T I A L SECTION 01 OF 03 PORT OF SPAIN 000128 SIPDIS SIPDIS STATE FOR WHA/CAR, WHA/EPSC, EEB/IEC ENERGY FOR OFFICE OF POLICY AND INT'L AFFAIRS NSC FOR WESTERN HEMISPHERE - V ALVARADO CARACAS FOR PETROLEUM ATTACHE E.O. 12958: DECL: 03/11/2018 TAGS: EPET ECON EAGR PREL KCRM VZ XA TD SUBJECT: T&T ENERGY MINISTER DISCUSSES INFRASTRUCTURE PROTECTION, VENEZUELA, RENEWABLE ENERGY, OUTREACH TO AFRICA REF: PORT OF SPAIN 119 Classified By: Ambassador Roy L. Austin; Reasons 1.4 (b,d) ¶1. (C) SUMMARY: In a March 5 office call, Trinidad and Tobago (T&T) Energy Minister Conrad Enill welcomed U.S. engagement on energy infrastructure protection and U.S. Embassy suggestions on legislation to improve law enforcement, while also softly echoing past messages that T&T does not want to be ignored. He reaffirmed the GOTT's arms-length stance on Venezuela's PetroCaribe and ALBA initiatives, at the same time indicating a move to renew momentum to negotiate with Venezuela on cross-border gas. In describing GOTT outreach to African energy producers, Enill made cear he does not think T&T needs the Extractive Idustries Transparency Initiative. On renewable enrgy, he said the GOTT is seeking advice on whichapproaches hold promise and said he is open to bilatral cooperation. END SUMMARY ¶2. (SBU) Durng a March 5 introductory call, the Ambassador hd a lengthy and wide-ranging conversation with Conad Enill, Trinidad and Tobago's (T&T) new Ministr of Energy and Energy Industries. Enill was joined by his assistant Dawn Pierre. EconChief accompanied as notetaker. ¶3. (C) The Ambassador opened the meeting by passing Enill a non-paper with suggestions for legislation to improve law enforcement, in view of Enill's role as Leader of Government Business in the T&T Senate. Enill welcomed the suggestions, saying he intends to spend time on the crime issue. He demurred on the Ambassador's invitation to visit Washington, saying his new duties will keep him close to home for the time being. -------------- -------------- Infrastructure Protection and Venezuela Relations -------------- -------------- ¶4. (C) The Ambassador thanked Enill for his ministry's support for the USG vulnerability assessment of energy infrastructure in January. Enill noted two points he had taken away from the assessment team's January 18 outbrief: (1) the ISPS Code was only a baseline for port security, not the end-point; and (2) no one really knows how T&T's existing response mechanisms would handle a terrorist attack. T&T could not discount the risk of an attack, Enill continued, particularly as long as Venezuela continues to be unpredictable and T&T continues "not playing along" with regional initiatives like PetroCaribe and ALBA. He added that Trinidad and Tobago seeks to avoid being caught in the middle of any dispute between Venezuela and the United States. ¶5. (SBU) Enill said Prime Minister Manning's travel schedule was making it difficult to confirm dates for the regional workshop on critical energy infrastructure protection that the Department of Energy (DOE) and U.S. Southern Command propose to organize in Port of Spain. EconChief replied that while the U.S. would be delighted to have the PM participate, DOE and SOUTHCOM envisaged a meeting at the senior technical level, not a meeting of ministers. Enill responded in that case the PM may not need to participate, and he undertook to get a quick decision on dates. ¶6. (C) On the natural gas fields that straddle the T&T-Venezuela border, Enill said T&T is putting together a team to renew negotiations on unitization of the Loran/Manatee field. (Note: GOTT and industry contacts tell us negotiations had stalled since T&T tabled a field specific unitization agreement in June 2007.) ¶7. (C) On PetroCaribe, Enill echoed recent statements by PM Manning linking PetroCaribe to Venezuela's Bolivarian Alternative for the Americas (ALBA) and concluding that T&T cannot participate in either initiative because it remains committed to the Free Trade Area of the Americas (FTAA) concept. Enill estimated the level of debt incurred under PetroCaribe for other Carbbean nations at US$1.5 billion so far. T&T for its part was contributing TT$420 million (US$67 million) annually to a CARICOM fund to assist import dependent countries facing high oil prices. Most of the importing countries, on the other hand, appear happy to PORT OF SP 00000128 002 OF 003 receive both grant money and refined products from Venezuela, leaving repayment to future governments and probably hoping the debt will be written off in the end. -------------- U.S.-T&T: "No problems, but don't ignore us" -------------- ¶8. (C) On U.S.-T&T energy relations, Enill welcomed the Ambassador's statement that the U.S. values T&T as a reliable supplier, and he admitted to not yet having a full understanding of T&T's importance to U.S. energy security. The Ambassador suggested that Enill take a look at the role of T&T's liquefied natural gas in Boston. Enill also said that he was not aware of any bilateral issues per se, but "there is a view" that the U.S. has taken T&T for granted. (Note: Prime Minister Manning had given strong voice to that view in public remarks and private meetings in late 2006/early 2007, but has toned such rhetoric down since the June 2007 Conference on the Caribbean.) ¶9. (C) Enill said he is interested in renewable energy and would welcome opportunities for bilateral cooperation in that area. With numerous promising technologies under development, Enill said he has asked researchers at the University of Trinidad and Tobago (UTT) to provide some analysis so that the GOTT can make informed choices. He observed, for example, that T&T's sugar cane could not compete for ethanol production because it contained too much water and not enough sugar. Rectifying this would have required T&T to shift sugar cane to its most fertile land, displacing food crops. This had not been "sorted out" by the time the GOTT withdrew its support for sugar production in ¶2007. In any case, T&T's future lies with knowledge based industries, not traditional activities like sugar that could only survive with government support or preferential market access. A large-scale demonstration farm planned for Tucker Valley in Trinidad with support from Cuban technical advisors might provide new directions for agriculture, but Enill also hinted that Cuba's involvement was creating problems for that project. -------------- Outreach to Africa and Revenue Transparency -------------- ¶10. (SBU) On the GOTT's outreach to African energy producers, Enill observed that African countries had been surprised to learn of T&T's success in monetizing natural gas when PM Manning participated in a February 2007 African Union meeting. T&T is continuing its technical assistance to African countries on managing hydrocarbon resources, Enill noted, indicating that some of the Africans have ambitious goals to commercialize natural gas as early as 2009/2010, believing it will be possible to gain expertise and run their own institutions in that short time frame. Enill observed that these countries would have to structure fiscal incentives to attract foreign investment, but he added that some are already being courted by China and India. (Note: The GOTT announced in 2007 that it would provide technical assistance to help a number of African countries monetize their natural gas, including Angola, Cameroon, Chad, Democratic Republic of Congo, Equatorial Guinea, Gabon, Nigeria and Tanzania.) ¶11. (SBU) Asked whether revenue transparency figured in T&T's outreach efforts, Enill said that was where the Extractive Industries Transparency Initiative (EITI) comes in, emphasizing that EITI was really designed for those countries. In contrast, T&T is already transparent, reporting energy sector revenues as a separate budget line item and maintaining robust mechanisms under its Board of Inland Revenue to ensure energy revenues are deposited with the Treasury. T&T derives revenue from taxes on energy companies, where as African countries are more likely to derive revenues through owning energy companies. (NOTE: Trinidad's own EITI candidacy, on which the Ministry od Finance has the lead, is stalled at this time.) -------------- Attracting Upstream Investment -------------- ¶12. (SBU) The Ambassador pointed out that U.S. energy PORT OF SP 00000128 003 OF 003 companies hope the GOTT too will get financial terms right when it next offers deep water blocks for bid. Enill acknowledged that T&T's 2006 bid round had suffered from poor seismic data, excessive local content requirements, and too much time between opening and closing the round. He said these problems would be corrected in bid rounds planned for 2008 and 2009. Referring obliquely to the financial incentive question, he said the GOTT will have to strike a balance between the need to compete for investment and the need to get the best value from T&T's depleting resources. He also expressed confidence in the future of oil and gas in T&T, citing improved exploration technology, forthcoming policies to maximize production from marginal fields, and the entry into T&T's market of new players with lower cost structures. ¶13. (C) COMMENT: In his previous incarnation as a junior finance minister, Enill had a reputation for steadfastly defending PM Manning's budget priorities. The same appears to hold true for energy, where Enill is carefully staying on message, for exemple on financial incentives in future bid rounds and PetroCaribe. Per reftel, Chevron executives have welcomed Enill's public statements on cross-border gas and would like him to reach out directly to his BRV counterpart. While Enill did not elaborate on cross-border gas, he was quite open with his views on Venezuela, and his remarks on infrastructure protection, renewable energy, and outreach to African producers offer opportunities to deepen cooperation in those areas. On issues of bilateral interest, Enill made it clear that he does not$think T&T needs the EITI, so it remains to be seen whether the new Finance Minister will get behind T&T's EITI candidacy. AUSTIN